Feeds

FCC opens door to ISP wipe-out

Re-monopolizing the phone service

  • alert
  • submit to reddit

Beginner's guide to SSL certificates

US telecoms regulator the FCC has signaled the end of the independent ISP, a move which will leave DSL provision concentrated in the hands of just a few large providers. The move, which turns local DSL provision from a regulated monopoly into an unregulated monopoly, also has repercussions for rural telephony providers, who will lose a chunk of subsidy, and has potentially chilling consequences for free speech.

Unless state regulators step into the void just vacated by the Federal regulator, however, every independent DSL provider will find itself at the mercy of the Baby Bells when its contract expires - and the Baby Bells have no compulsion to renew those competitors' contracts.

At the moment in the US, DSL is sold wholesale by companies owned by the Baby Bells, aka the "ILECs" (incumbent local exchange carriers), such as SBC (formerly Southwestern Bell and Pacific Bell), and Verizon (formerly Bell Atlantic). The ILECs are also DSL retailers, of course, in direct competition with independent ISPs who depend on the ILECs for service and in most cases, infrastructure.

In a statement today the FCC said it was scrapping the mandatory sharing requirement on incumbents that "caused vendors to delay development and deployment of innovations to consumers." In June the Supreme Court ruled that cable broadband is an "information service", rather than a "telecommunication service". The latter is subject to the watchdog's oversight and public service obligations, while the former is not. Now the FCC is stepping away from regulating DSL with the justification that it needs to "level the playing field", reasoning that two mistakes cancel each other out.

In a statement, the president of the California ISP Association CISPA Dane Jasper described it as "a re-monopolization of a network that has been publicly regulated and paid for by rate payers for more than 100 years."

"This is not leveling the DSL playing field. The FCC is putting a fence around the playing field and giving the keys to a few phone companies with armies of paid lobbyists, letting the phone companies decide who can play in the broadband game."

So what happens next?

Much depends on what the ILECs - the wholesalers today - decide to do when the ISP contracts expire. No ISP large or small is safe, but it's hard to see the ILECs pulling the rug away from the larger DSL ISPs such as AOL or Earthlink without a fight. The largest ISPs have the legal and financial clout to make termination of their contracts at the very least awkward experience for the Baby Bells.

The alternative for ISPs is to negotiate a deal with a CLEC, a competitive local exchange carrier, but in practice that means Covad. (Of the three national CLECs once offering national wholesale DSL, Covad survived Chapter 11, but Northpoint and Rhythms didn't - they went bankrupt and dissolved.) But Covad service isn't cheap and is beyond the reach of the smaller indies.

So ILECs are likely to target the local ISPs for termination, taking out a competitor and cutting their own costs as a bonus.

In theory the FCC's ruling shouldn't matter on a regional basis, because the states regulate their own phone services. But in practice intensive lobbying has neutered the state regulators.

For example, the California Public Utilities Commission decreed that SBC should not retail DSL below the price of its wholesale offerings. However, SBC won itself an exemption for special promotional offers, and permanently offers retail below wholesale prices by running non-stop, back-to-back "promotions".

Without economies of scale, and the financial muscle that buys lobbyists and lawyers, the outlook for small DSL ISPs looks grim. ®

Related stories

Supreme Court wallops telcos with a large cableco favor
Cable broadband regs draw high court review
Vonage calls for 'naked DSL'

Secure remote control for conventional and virtual desktops

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Will BlackBerry make a comeback with its SQUARE smartphones?
Plus PC PIMs from company formerly known as RIM
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
EE buys 58 Phones 4u stores for £2.5m after picking over carcass
Operator says it will safeguard 359 jobs, plans lick of paint
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.